325 Why Big Accounting Firms Can Charge Big Prices

It's Friday. The sun is shining. It is a great day to be an accountant. And today we are talking about why big old accounting firms can somehow get away with charging highway robbery rates. Like, wow. Because I've seen the work that big firms do, and I don't think there was ever one time where I was, like, profoundly shook by what I saw, like, in a positive way, where I'm like, wow, that's so impressive. They have so much resources. They could do this. We could never do that. No, it was usually like, really? They made that dumb mistake. I mean, I've made it before, but I'm. I just. I guess I just expected more. So why is it that they're able to charge so much? We're gonna dig into that because I think it actually factors into how we position our. We relatively. We bitty firms. But it's Friday, so we're also covering the story behind my lowest performing video ever. And if somebody's going to, like, cut the team loose with an AI assistant tomorrow, why, I think my recommendation of what to use has. Has probably changed. It's not chatgpt and it's not Claude. What? Gasps Come on in. I'll tell you all about it. Welcome to Jason Daily. Okay. This debate was raging, raging on social media. I don't want to call out, like, anytime I see these. I don't call out the specific people involved because I don't want folks to, like, go on bandwagon, like, disagree with them or something like that. It's not about the people, it's about the discussion, because it is an interesting discussion. So here's the conversation as it kicked off. This is a quote, and I do think it informs how we think about our pricing, which is why I think it's worth digging into. Here's the quote. First off, I'm not saying big CPA firms are doing crappy work for their larger clients. I'm saying they're doing crappy work for their smaller clients who are changing to this person's smaller firm. The big. The big firm simply doesn't care that the clients are switching. The crappy work I'm seeing is because partners who knew the clients have retired and their, quote, tribal knowledge of those clients is gone. The firm is not asking clients questions and is assuming the clients can self prepare their own books with no direction. Mostly the owner and the spouse do the books. Big firms use big materiality thresholds over and over. These clients switching say they cannot get questions answered and everything takes forever. Let's say this big CPA firm is bought by pe. What happens? More partners take the money and retire, making the lack of partner knowledge worse. PE spends a lot of money on technology. This does not help fix any of the problems I'm seeing. PE spends a lot of money on outsourcing. This doesn't help fix any of the problems I'm seeing. In fact, it may make things worse. PE prioritizes profits instead of people that will automate more and more. The people switching just want to be able to talk to a person occasionally and get their questions answered. They also want some real advice. A chatbot is not going to fix that. I think PE buying giant CPA firms will help my small firm because even more clients will want to escape. What am I missing? A lot of things in there. So, I mean, we've probably all got had that situation where a client came to you from a larger firm. You were disappointed at the quality of the work. First thing we all go and do, right, we run and look at professional fees from last year. That's always an exciting moment when you dig in there. Sometimes it's a devastating moment because you may have had that first call and you're like, man, I think we're really vibing. I think this could go somewhere. Yeah. And then you look at professional fees last year and it's like, John McJenkins bookkeeping and tax, $85 a month. And you're like, gosh darn it, who is this maniac that's setting this person's expectations all wrong? That being said, stick to your guns. When you got a new client that's coming to you because the last provider wasn't enough, they cannot have their cake whilst also eating it. They always want to come to you for the same price, but get more service. And you're like, buddy, that's. That's not how this works. Anyways, big firms, is the quality of the work getting worse? Worse, man, I don't know. And I don't know that there's like a generalized answer you can actually give. I would say almost certainly. I don't think PE improves the quality of the work. It does seem to prioritize, like probably just getting that stuff out the door. I think in the PE environment, it can be hard to hang on to talented people too, because when done wrong, it kind of just runs everyone into the ground. There's going to be exceptions to the rule here, but, I mean, I've put the call out on social media. I'm like, can someone show me examples of PE coming in like measurably improving a firm. And I've yet to have anybody come in and like, give me a clear example. You will get the stands who come in and are like, no, it's beneficial for this or that. And like in every single case, it's somebody that stands to gain something from PE getting involved in transactions, which, let's be real, is a lot, a lot of people. My neighbor, I was talking with him, he's an, he's an attorney and he's got a buddy who's also an attorney. And the last few years, almost all of his time has been taken over by working with the AICPA who will send him firms who are looking at taking PE investment. Like, this is big business and everyone is involved in it. And so to then go back to those people and be like, what's your honest take on pe? If somebody's getting money from it, like, that's, there's not an honest take. It just isn't right. At this point in time, like, I struggle seeing PE feels like a like way to, to buy some leverage to get the partners out. Like, that's just sort of what it feels like. And it feels like at some point that all collapses in on itself. But there's a lot of other industries where that's happened too, like Medical. This happened really 20, 30 years ago. Not to say that medical is in a great spot in the US but whatever it's happening, how does it impact us smaller firms? Does the quality of work continue to go down? The. Maybe, but I don't know that the quality of work is ultimately what leads to people making buying decisions. I actually think in accounting firms it's all the other things. It's what they do understand. It's a communication. And they brought up here in this post that people were frustrated. Like, I can't get anybody to call me back. That's where most of my larger firm clients came from was it was like in the beginning it was good, but over time it just feel like we got less and less attention and it was like pulling teeth just to get somebody to call us back. And you look at the fees they're paying and it's like 10 to 15 grand for an S Corp, a basic like million dollar a year engineering firm, S Corp and the 1040 and you're like, I will happily take that off your hands for 13 a year. That's a pretty good project. And so I actually like when we look at this work like we're quick to crap on other people's technical Work because we as accountants, that's what we stake kind of our internal identities on. And it's why oftentimes when we go, when we turn to social media, we're turning to other pros and learning from professionals and we go to CPE to make the technical stuff better. When it's like what we're actually missing is how to run a business because we're never going to technical our way into getting home in time for dinner. So when we look at this and we look at big firm problems, what we see is, okay, it doesn't look like, at least for SMB clients, it doesn't look like they're really able to do anything that I can't do. And oftentimes they do it worse. There's going to be situations like international stuff, big firms, all that. There's going to be a whole world there that me as a small firm owner, I probably don't understand. And I'm sure big firms are great for that stuff. But I know million dollar SMBs. I know what they need and I know what they don't need. I know that I can serve them fine. And I don't see the big firm doing anything that's necessarily big. And so ultimately these clients are leaving for the same reason that they would leave you or I. Itty bitty firms, firms of any size, the experience, the side of the experience that they can understand. Because when they don't understand the professional work and how it gets done and they have no way of benchmarking it against how another firm would do it, then they make buying decisions just based on what they understand. But it doesn't feel like they're being taken care of. They feel as though they've been forgotten. This episode is sponsored in part by Live Flow. I love software vendors when they love me and it's why when I go to accounting conferences, I look around and I say who's here and who's not here? You will consistently notice that the folks that turn up at accounting conferences, the brands are the most engaged, have the best understanding of accountants. There are enough tone deaf software companies out there that just do not get it and like are not solving meaningful problems for us or are developing in this direction that they think is interesting. And we're like, no, no, no, no, like this is the path. It's actually interesting for my business, Live Flow, man, you see them out in the wild. I see those folks probably six to eight times a year, the foundries at all sorts of different conferences. It is a great validation that they are actually building something of meaning for the way that we work Life Flow. Basically their business is they Sync data from QuickBooks or 0 to Excel or Google Sheets. And there's a bunch of different ways you can use that from reporting to extending information to like third party stakeholders who you don't want to have in the QuickBooks file to month end close management. A growing number of firms are actually managing the month end close from a single workbook by sinking a bunch of data out of the accounting file all at once. So you got a whole bunch of tabs in this big workbook. You're not like printing a bunch of reports from the ledger. Right? Like that's what they're trying to get away from anyways. LifeFlow is a company that's been a leader in that from the beginning. They're not like a quick little plugin like cheap utility as much as they are. We're going to help you do this with a whole bunch of your companies. We're going to help you with consolidations. Like we are the kind of the full suite for doing this like a platform for extending your spreadsheets rather than like a little utility to like sync some data back and forth. If you're at an accounting conference, take a look for liveflow. You may see them there. And learn more about lifflow. Check out the link down in the show notes. This episode is sponsored in part by Team Up. Do you like middlemen? I don't. Get out of here. Middlemen and women team. Team up cuts out the middle people. Yeah. By giving you direct access to talented accountants in the Philippines. I don't need some suspicious character between me and my team. They're my team. Team Up's got the on the ground recruiterments in the Philippines that'll help you find super, super talented people with the experience that you are looking for. And then after you hire them, you know what Team Up's gonna do? They're gonna. They're gtfo. Can I say that? They're gonna gtho my biz Unless. Unless you want help from them. That is one thing that I heard they're doing more of is just like offering support like hey, never worked with offshore people before. Happy to hop on a call and kind of give you some best practices. But what they won't do is be the middleman long term. Charging fees, cutting out a big old part of the monthly check that you thought was going to your team member that's actually going to line that middle person's pockets. Not a team up. Okay, that's their model. Direct hiring in the Philippines. All they're going to do. So they're going to help you find people rather than going through a BPO where you're paying like, like a facility or kind of a facilitator or employer record. And the person. I know people that do it both ways. There's actually arguments to be made for both ways. Team ups approach. They want to help you work directly with the team, if that's the flavor you're looking for. Check out the link down in the show notes to learn more. And so if you strip away all the considerations around technical capability and all that, then why do people pay big firm prices, right? Like, think about that. Why? Honestly, I think you could go round and round on pe, on technical ability, on all these things that don't make a lick of difference to the client. And boil it down to people pay big firm prices to big firms because they want to feel like big firm people. It's the same reason somebody buys a couch from Restoration Hardware instead of Crate and Barrel or instead of Ikea or something like that. In fact, maybe that's a bad analogy because those couches are actually better most of the time. But people, ultimately, they will go and they'll spend more money for bigger help because it makes them feel like a big man, big woman. Because how it makes them feel. And we get so fixated on the technical stuff, like, as if we're selling them a Camry and the other firm selling them a Camry. And so we're like, why would you not? Why are you paying them more than us? This isn't fair. And it's like, no, what they're buying is the experience and how it makes them feel. They're not buying the technical work. They just aren't. They're buying the experience. But we're so fixated on the technical work and getting it out the door that, like, we don't put any investment into the experience and how we're perceived and all that because it feels like waste, right? Like we are hustlers. We want to do the work. We don't want to do all this peacocking and say, look at how important I am. And like, that just feels wasteful, right? And, hey, I want a virtue signal as much as the next guy and not waste money and resources on all that, unfortunately, because they don't understand any aspect of what we do. It matters. It really matters. And this is where if you don't have an interest in running a big firm, which if you're listening to this podcast, you almost certainly don't. But this is where finding the shortcut to being perceived as the guru is gold. And we've talked about this a bit recently, how if you think about the watering holes where your dream customer hangs out, if you think about where they consume and almost everyone consumes niche content these days, like main mainstream media is kind of being disassembled and increasingly folks are consuming from individuals like people like me. In fact, there's a survey recently and now for the first time ever, there's a higher percentage of people who would sooner go and like binge a bunch of stuff on YouTube than they would like traditional media on a streaming service or on cable. And a lot of that's generational. But increasingly every little niche, every little pocket of the world has their own media that they can go and consume and learn from. And those kind of special interests all have their own home now. And if you can be the only person for X within that domain that they see, they will just assume that you're a guru. If you're the only person for window cleaning, for the STR owners that are tuning into a podcast, that's an awful example. If you're the only brand for a collagen supplement within this certain like fitness industry, if you're the only tax pro, if you're the only bookkeeper that's showing up consistently at this watering hole, the perception will be wrongly probably that you are the guru for that space and we can get there without a big spend, like without having to pony up a bunch of money to sponsor stuff. It's more about just like being willing to consistently turn up and stuff like social media, obviously that's free, but on other channels that may be like guest writing a thing for an association each month, writing something for someone's newsletter, going on somebody's podcast as a guest, even trading ad credits for like free work for the influencer or podcast host. People will ultimately pay for what they think they're getting, which sucks and is unfortunate. Like it's, it's, it is not like buying a product where you can walk around and kick the tires on it or it looks more impressive than something else. They're coming in blind, usually, and they will pay according to how they're going to feel about making that purchase. And there is a subset of entrepreneur who want to feel really important and want to feel like they've got the best people for the job and they will just arbitrarily pay more to a big shop thinking that that will Improve their outcome? Do they actually think that it will? Some of them probably do. But honestly, some of them, they're probably just turning up because they want to feel important. And absent having a big old firm, the much easier way to get there is what is the shortest path to being the guru for X. Good luck. Being the guru for small business, not going to happen. But being the guru for, for bookkeepers, for whatever it is, and, and I know you're cringing at the notion of being a guru for anything, because if anybody knew how naive we were in the dumb mistake that I made just yesterday. Like if anybody knew that, they would never think that you're a guru, right? But that is all like self limiting beliefs. Perception is reality. The fact is, if you are engaging with a space more than any other accountant that you see out there, you, you may not be like a guru in the absolute sense, but are you guru, er, than anyone else that could help them? That's maybe the more important question. Gosh, we did. This is the same thing we did the other day with Premiumer. We're not going to. Guruer is not going to stick around. You know what I'm saying? Okay, so how can big firms charge big firm prices? Because people pay big firm prices to big firms because they want to feel like big firm people. If they want the best of the best, if they're willing to pay more to feel like they're being served by the best of the best, then you have to hold yourself out as the best of the best. You got to be the guru there. But the good news is you can get there pretty quickly. If you go specific enough and you are the one that they're seeing repeatedly, then they're going to come in instead of being like, here's what I paid my last guy, they're going to come in with big question marks thinking, is this guru going to be too expensive for me? Which is a much better place to find someone then than the other end of the spectrum where they're price shopping you against everybody else and they're going to just try to get you as cheap as possible. Like when you're the guru, you are the guru, you are one of one. And so they could still go get their stuff done from somebody else who will tell them, ah, your stuff's the same as anybody else's. And that may or may not be true, but I would much rather have the position of the guru. Right, okay. The story of my lowest performing video ever. So we have a, had a Labor Day holiday weekend, a Couple weeks ago in the States, that's kind of like it's oftentimes the last kind of holiday before the kids go back to school, so people leave. So the video went out during this period, which also didn't help performance. But the video was an accounting meme review. And it's not. It wasn't like absolutely my lowest performing video of all time because obviously I've done videos way back in the day that would have gotten fewer views. But YouTube has this really passive aggressive thing in your YouTube dashboard where every time you publish a video, it will rank how that video is performing after X number of hours compared to the past 10. So if you go in there six hours after it's published, it'll say it's, you know, one out of 10 for the first six hours compared to the last, I guess nine videos or, or five out of 10. This meme review, it was a 10 out of 10, but after the first day had half as many views as the number 9 1. That was how shockingly bad it was. And I, I kind of expect this when I do meme reviews because I think they're a hoot. And there are people that absolutely love them. They're like, this is my favorite thing that you ever do. And it's a pretty loud bunch. But the reality is it is a good example of where even though you could be speaking to the same type of person with your content, the intent of that consumer doesn't align with the thing that you're making. So building a business around entertainment stuff, nigh on impossible. Sometimes that stuff can catch and you can find kind of a broader audience of people. Like, I did those AI generated like Lego boxes for accounting. Like there was a Lego box that was on it and it was lady counting potatoes. There was one for tax where it was just a person crying at their desk late at night. And then there was a pizza party one, and that, like, went super viral online. Got reposted a bunch of different ways, but you know what it led to for me? Absolutely nothing. So ultimately, what was the value of that for my business? Like, there was no value for it. If the people already in my audience saw that and were like, that's pretty funny. Maybe there's a bit of value there. But besides that, like, that was in no way helpful to me. Besides, like some sort of notch on my Internet point bed post. We all have one of those, right? Like, unless you're just in it for the Internet points and nothing else, there really isn't any value to it. This Episode is sponsored in part by Finn Daily. Pop quiz time. Did you know that I once developed a SaaS app for accountants that fully automated the cash reporting that we did for our clients? True story, I built that like three years ago and then I sold it to a guy, Luke Templin. And Thin Daily is still running strong. I'll put a link to it down in the show, notes Fin Daily IO. I frankly love it. Maybe I'm slightly biased, but basically how it works is it's like it's an email builder, kind of like an email marketing tool. But you plug variables into those emails and those variables can be values that are pulled from QuickBooks, from Xero, from Plaid, like banking figures, even from like Zapier. If you want to pipe in your own information, you build these email templates and you plug variables in. It can do stuff like, like math, like adding up a number of outstanding bills, that sort of thing, tables of like outstanding invoices. Build all this stuff into emails and then you set the schedule that email will send on and at the time that it sends, it goes out, makes the API call to all those services, pulls in current data and then sends that email off. And this was the cash reporting that we were doing for our clients to be like, hey, here's the bills we got coming up, here's how much money's in the bank. Here are all these different factors all in an automated email. And folks were paying me a bunch of money for this service. Now since I got out of Thin Daily, done a bunch more stuff like being able to connect to a bunch of different QuickBooks files and like pull that stuff into a single email for like multi company sort of things. Been adding a bunch of cool things. Super useful tool. Like it's one of those things where if you have the use case for it, you're like oh my gosh, where has this been all of my life? And if you don't, you're like why would. I don't understand this. Why is this even. Why does this exist? I don't. Why would I want this? I find that people are in like one of those two end of the camps. I still love it. Still around a fun bit of Jason Daly lore Thin Daily is check out the link down in the show notes to learn more. This episode is sponsored in part by Forwardly. Are you sick of waiting for ach transfers that stick to bank hours or checks to get caught in the mail? Do you want to save hours on bill pay each month for you and your clients? Forwardly is Your solution for Instant Instant Instant B2B payments forwardly offers an easy to use, award winning ARNAP solution for accountants and their small business clients. Featuring advanced approval workflows and a revolutionary four way sync. Four ways with accounting software. What could the other ways even be? The software eliminates all manual work, automatically categorizes and records financial transactions for both customers and vendors, maximizing cash flow by ensuring payments are received instantly in your bank account. Enjoy same day Ach for free. Why is that not a thing? Why is that not more of a thing? Forwardly. It is a thing, obviously. Set up your free account@forwardly.com to work towards a free iPhone offer. Color me intrigued. Check out a link down in the show notes. Now to bring it back to accounting. Meme reviews I love doing this. Like the favorite video and the editing is so stupid. I enjoy it so much. And there's a little subset of my audience that also enjoys it to where I'm okay doing it. And the last three I've done, they've also bombed. But I keep coming back to it because it's something that like, I super, super enjoy doing. And people in Hollywood, like folks that direct movies and actors and stuff like that, oftentimes they will talk about the art, the art of what they do and the notion of doing one for, you know, the critics, one for the box office and then one for them where it's like, okay, I'll go do your big Marvel movie, but then I'm going to give myself permission to do one for me. One that's like, interesting and challenging for me. And I do think oftentimes it is in your willingness to do that, the thing that's against the grain, that oftentimes you discover, uh, new things that you're interested in, new things that a different type of audience could be interested in. And if we like go so hard on all this business advice and social media and whatever advice, if we go so hard that like, we're just cranking this thing on rails and it doesn't leave any space for curiosity. That's kind of lame. Right now I'm all for like getting a business pumping and just like cranking on that thing that works. But, but like, that's what I want to hire people for. Like, I want to find folks for whom being able to crank that thing is a great opportunity for them. Because for me, that's not a great opportunity. That's not something I want to do until the end of time. I want to have the flexibility to explore. Otherwise what Is the point of being an entrepreneur, of owning your own business, of being a leader? Like, unless you're affording yourself some sort of flexibility you wouldn't otherwise have, why would you not just go to work for somebody else? So as much as we talk business advice and best practices and all of that, like, never forget that kind of the greatest gift of running a small flexible thing is being able to be like, I don't want to do that, or I disagree and I'm just going to go do it this way. In fact, oftentimes that's good for business because you'll find the other people who are like, yeah, I don't like that either, or, hey, I'm weird in that same way. You too. And because the Internet and the world is big enough to bring those folks together that you can't get too, like, you can't get so hung up on best practices and all that frameworks, you can't get so hung up on that that like, you lose your humanity and, and curiosity along the way. Now, if there's a tactical social media tidbit in here, it is that your postings can actually be a balance of posts that optimize for reach. So those are the things you're a little more clickbait things that, you know, people will just agree with because those are ultimately the things that usually go viral. Somebody saying something that they know everyone will agree with. And it's like, yeah, here's my like, and it's like, what did that, what did that just achieve? But balancing posts for reach with posts for depth, and we will see like the social media accounts that are 100% reach, like, where they're just trying to play the game and around that it's hard to honestly do anything of meaning because you're not changing people's minds. You're not delivering value so much as saying what everybody kind of already feels. But then if you go 100% the other end of the spectrum, where it's all depth and nuance and maybe kind of arcane and hard for people to get into that also, unfortunately, the way social media algorithms work today won't always find more people. And so there's probably a balance there. And this is what I do with my posts. I do more long form stuff and I do a balance of like, funny stuff and like somewhat nuanced take stuff like pithy, like shorter form sort of things that may find new people. So if there's any seed of wisdom to be taken from this rant about accounting memes, it Is that some variability in that posting where it will find kind of different bubbles and pull a couple new people into your mix as a good way to broaden kind of the folks who see you online. Okay, best AI assistant to use today. I teased this is as of September 2024 and as I'm recording this probably tomorrow we'll get a new AI model and my recommend recommendations will change. ChatGPT team. The team plan comes with all the security stuff that you want. Historically I've recommended that, but it's $30 a month per user and if you're gonna roll something like that out across a team of 10 or 20 people like that becomes a reasonably good sized line item. Claude, same price, Microsoft's Copilot. It's terrible, but it's also $30 a month Google Workspaces thing. It's either 20 or 30 bucks a month, but also nowhere near as good as ChatGPT or Claude. I'm gonna sound like a shill here. So rightworks, they've got Spark. It's like they want it to be chatgpt for the accounting profession. I did a maybe a month ago I partnered with them to put out an AI usage policy that is like a template anybody can swipe for their firm. I was going to do it myself, but then I reached out and I'm like, you want to do this with me? And you can like basically do more of the work, maintain it on an ongoing basis and then it's just going to have more weight if it's coming not just from me myself, but they've got rightworks has got their AI assistant kind of for accountants called Spark. And the reason why I think it's probably makes a lot of sense for folks today is it's 17 bucks per month if you buy it by the year. And in the chat assistant you can change what model you're talking with. So you could actually talk with the best ChatGPT models and you can talk with the best cloud models from a single chat assistant for less than it would cost to just use one of those services. Now the reason I struggle with this is I want to see how all the different models work. And there's different user interface things in Claude now like artifacts and ChatGPT has some different user experience things and I want to geek on all these things. The reality is the rest of my firm, like they have jobs to do, they have stuff to get done, so they need a more focused version of using an AI assistant that is not as exploratory as mine. Probably. And for them, I'm not going to spin up three different apps for them to, like, kick the tires on and play with. And that's where I think right now, Spark might be the best option. They've literally told me they are basically buying users right now, paying the price in, like, the API usage fees in order to get people onto their platform for the long term, because they have a belief that just this AI stuff's just going to keep growing and growing. So they're literally subsidizing where you would otherwise have to go to ChatGPT or Cloud and pay more. You can come to Spark, get the same thing for cheaper in a single place so you don't have to carry multiple subscriptions as well. Again, for myself as a user, I'm probably going to go and use all those services, but my entire team should not be doing that. So if there's one thing I'm going to put them on, I. I think Spark probably makes sense. In fact, I'll put a link to that down. The Show Notes is not sponsored in any way. I have no partnership with them, but it's a cheap way to get it in people's hands. Right now, this is supposed to be a really big fall for AI stuff. We're going to get the next OpenAI model, which might be pretty wild, may drive some more like, autonomous, like AI agents being able to do their own thing on their own. Obviously, as soon as we get that, we're going to be here talking about it. The help can't come soon enough. Like, I have zero fears about it replacing some aspect of what we do. I just want help. I want AI to make my job easier, to make my firm more profitable. And that is, frankly, all I care about. So when we can do that, we'll be here talking about it. And I'll see you here when we do. Have a nice weekend. Thanks for hanging. I'll see you next week.